MINNEAPOLIS (April 11, 2014) – Spring cleaning season is here. For most, the garage, basement, and wardrobe immediately come to mind for an annual review, but what about reviewing that pile of retirement account statements that have accumulated throughout the year? These days, career paths commonly include multiple job changes with different companies. For many, making time to consolidate retirement accounts can create an easier financial future.

Often times when people switch jobs, open separate retirement accounts or have accounts left to them, those funds stay separate and dispersed among companies, institutions or owners. However, some individuals may be able to save time and possible expense by rolling older or multiple retirement accounts into a single Individual Retirement Account (IRA).

IRAs allow investors to continue saving for retirement on either an income tax deferred or an income tax free basis. IRAs can hold mutual funds, bonds, or cash investments, based on an individual’s risk tolerance and desires for growth.

Current rules permit nearly every qualified retirement plan to be either transferred, or rolled over, to another qualified retirement plan. (A financial professional can help navigate the rules and exceptions for combining various plans.) Common qualified retirement accounts that might be eligible for a rollover include: 401(k), 403(b) or 457(b) plans. Should account holders meet a distribution event under these retirement plans, like leaving an employer to take another job or retiring, balances can be transferred or rolled over to either another employer-sponsored qualified plan or an IRA on an income tax advantaged basis.

Two options for IRAs: tax now or tax later

A traditional IRA accepts pre-tax contributions which are taxed, along with any investment earnings, upon distribution. A Roth IRA accepts income contributions that have already been taxed. Those contributions, along with any investment earnings, are dispersed income tax free if certain requirements are met. As with any investment, the growth of these two types of accounts isn’t guaranteed and there are inherent risks.

An IRA rollover is the act of funding an IRA account with assets being rolled over or transferred directly from an existing tax-qualified retirement account, such as a pension plan, a profit sharing plan, 401(k) plan, 403(b) plan or another IRA, typically, without either tax penalty or income tax withholding, for continued tax-deferred growth. Special rules apply to distributions to and from designated Roth 401(k), Roth 403(b), Roth 457(b) and Roth IRA accounts, as Roth accounts can only be rolled into a Roth IRA.

The advantages of a single retirement account

Consolidating retirement accounts into a single IRA can also be an advantage when it comes time to take a mandatory distribution (which typically happens at age 70½ for most taxpayers). By having one IRA, account owners only need to make one annual calculation and one annual distribution. Multiple retirement plan accounts would necessitate multiple annual calculations and multiple annual distributions.

In addition, it may get easier to track later in life. In the event that the account owner needs assistance or is unable manage their own finances, managing one retirement account can be easier for caretakers.

Finally, consolidating retirement plans into one account can make it easier for loved ones to locate and handle upon the death of the retirement account holder. While it may seem trivial, death is often a time of confusion when it comes to finances. Simplifying the number of retirement accounts someone holds can help relieve some of the burden from survivors at a difficult time.

While it may take some time on the front end, evaluating retirement accounts could have some worthwhile results at the end. A trusted financial professional and a tax advisor can help review the tax impacts and differences in services, fees and expenses between each of the choices before making a decision.Plus, eliminating those piles of paperwork will make next year’s spring cleaning even easier.

Thrivent Financial is a financial services organization that helps Christians be wise with money and live generously. The organization offers a broad range of products and services along with guidance from financial representatives nationwide. For more than a century it has helped its nearly 2.4 million member-owners make wise money choices that reflect their values. Thrivent also provides opportunities for members to be even more generous where they live, work and worship.